CSCS launches SLB in capital market

THE Central Securities Clearing System (CSCS) Plc has launched Securities Lending and Borrowing (SLB) in the capital market to ease process of operators.

The General Manager, Operations, (CSCS), Joseph Mekiliuwa, said in Lagos that
the SLB arrangement would enable market participants to lend securities from a registered Securities Lending Agent (SLA), and is open to the Custodian Banks and brokers.

According to him, the arrangement would help market participants to sell securities that they do not have and lend from the SLA to cover their short fall before settlement date. The post–trade allocation arrangement will enable stockbroking firms buy securities en-bloc into a pool account on behalf of a custodian firm and on the same day re-allocate same securities to the beneficial owner’s accounts domiciled with the custodian firms according to the beneficial owner’s mandate.

Mekiliuwa said, “foreign institutions that are willing to participate in the SLB are required to appoint a local SLA in Nigeria, who will act on their behalf. It is the responsibilities of the parties to ensure that the securities lending contracts agreements are in compliance with the best practice and applicable laws accordingly.”

However, he said, this document covers the account holding structure, securities transfers or detachments and other related processes to facilitate timely delivery of securities”. CSCS, however, will not allow lenders such as custodians or dealing firms lend shares on behalf of the owner of the shares either from a segregated or omnibus account without the Securities Lending Authorization Agreement (SLAA).

For transfers that is required by a borrower to settle short term transactions, he told participants that the SLA and borrower would have to complete the transfer request latest by noon, two days before settlement. This, he said, would allow CSCS deliver the shares into the borrower’s account a day to settlement.